Street Scene; In Search for a New Sheriff, One Stands Out

By KAREN DONOVAN

Published: May 18, 2007

As New York attorney general, Eliot Spitzer won national attention by becoming the new sheriff in finance, taking on Wall Street and mutual funds and the insurance industry.

With Mr. Spitzer now in the governor's mansion, is there another state regulator trying to take up his badge? A strong candidate for the new Spitzer might be Marc Dann, the new attorney general of Ohio.

Since taking office in January, Mr. Dann has sharply criticized the UnitedHealth Group over its ousted former chief executive, William W. McGuire, who is accused of backdating more than $2.3 billion in stock options, and he has revived an investigation of Marsh & McLennan, looking at whether the company violated the state's antitrust laws. He is also trying to rally other state attorneys general to join him in cases affecting investors before the Supreme Court.

Mr. Dann demurs when asked whether he is trying to emulate Mr. Spitzer. ''Certainly there was a vacuum,'' Mr. Dann said.

The two men spoke on the phone during the campaign, and Mr. Dann received a small check from Mr. Spitzer. ''I almost framed it, and didn't cash it,'' he said.

''I never worked on Wall Street,'' Mr. Dann said, ''but what I do is look out my window every day and see some of the devastation that's been reaped on the Midwest and the Rust Belt by people who are only looking out for the bottom line, sometimes to the extent of making business decisions that violate fraud laws or civil laws or even our criminal laws.''

While Ohio is a long way from Wall Street, the state has played a major role in securities class actions. The state's public pension funds, when combined, are the third largest in the country, after California and New York, and as a result, Ohio often ends up as the lead plaintiff in shareholder lawsuits.

Jay Eisenhofer, the Ohio pension fund's lawyer in its case against UnitedHealth, said that Mr. Dann is taking a similar tack as Mr. Spitzer, but with a focus on changing how boardrooms handle their obligations to investors.

''I look at him as being more of an activist in the area of corporate governance,'' Mr. Eisenhofer said.

When Mr. Dann took office, Ohio was already lead plaintiff in several prominent cases, one of them being the UnitedHealth Group case. Shareholders have sued the company, its board and executives in an effort to revoke the stock options that were granted to Mr. McGuire. Mr. Dann accused a special committee set up by UnitedHealth of dragging its feet in deciding whether action should be taken against Mr. McGuire.

Mr. Dann traveled to Minneapolis to meet with the special committee. The committee, made up of two retired Minnesota judges, then canceled the meeting. Days later, Mr. Dann wrote a letter accusing the committee of ''inexcusable arrogance.''

Before entering the Ohio Senate in 2003, Mr. Dann, 45, ran a storefront law office in a strip mall, where his general practice ran the gamut from divorces to workers' compensation and personal bankruptcies.

''You could drive up to my law office,'' he said.

In 2005, Mr. Dann made a name for himself by becoming a tenacious critic of the Ohio Bureau of Workers' Compensation, which was then embroiled in a statewide scandal for taking $50 million in money set aside for injured workers and investing it in rare coins. Mr. Dann sued Bob Taft, the governor at the time, to demand public records relating to those investments, and he fought the case to the Ohio Supreme Court. (The court ruled for the governor, and Mr. Dann never got the documents.)

''He fought to the end,'' said C. J. Prentiss, former minority leader of the state Senate, who called him a ''gentle bear.'' Although known as a tough fighter, he almost cried on the Senate floor while championing an anti-bullying bill for the state's schools, telling painful stories of his chubby youth.

Many, if not most, state attorneys general aspire to become governor some day, but, at least for now, Mr. Dann does not appear to have that in his sights. ''He was born to be the A.G.,'' Ms. Prentiss said.

His most ambitious effort thus far has been persuading 23 state attorneys general to sign onto a brief arguing against a brief filed by the Securities and Exchange Commission in a case before the United States Supreme Court.

At issue is the interpretation of a provision of the Private Securities Litigation Reform Act of 1995. The S.E.C. is urging the court to adopt a standard that would make it harder for shareholders to prevail in fraud lawsuits against publicly traded companies and their executives. The commission argued that the litigation reform act required investors to show by evidence ''a high likelihood'' that the defendant possessed the intent to violate the law.

''Well, I was just enraged,'' Mr. Dann said. ''I want to make sure that we are out there with our amicus brief so that we can maybe shame them.

''At some point I would hope they would take a position on the side of the investors. Or stay out.''

Photos: Marc Dann has been a vocal critic of the UnitedHealth Group and the Ohio Bureau of Workers' Compensation. (Photo by Kiichiro Sato/Associated Press); (Photo by Jim McKnight/Associated Press)